Jackie Judd: I’m Jackie Judd with a special edition of Health on the Hill. Joining in the conversation: Mary Agnes Carey of Kaiser Health News and Eric Pianin, also of Kaiser Health News. Welcome to you both. It has been a rough and tumble August recess. You’ve both been reporting on the fall out. From the political and health experts you’re both talking to, how have the past few weeks changed? What’s possible? Mary Agnes?

Mary Agnes Carey: There’s been a lot of concern about the reaction at the public meetings where voters have expressed concern about the size of the package, how it will be financed, how a public plan may or may not help them, and it’s giving some lawmakers and health analysts pause to think that perhaps some of the more ambitious plans of the party can’t be achieved now and a smaller package may be the best way to go.

JJ: What would go?

MAC: Well, they may scale back the size of the Medicaid expansion. They could have a lower level of subsidies to help low-income individuals and families buy coverage; they could phase in key provisions of the bill at a slower rate. These are just some of the opportunities and possibilities for a scaled back package, if in fact that’s the way lawmakers go.

JJ: On the political end of this, Eric, are Democrats now in a position where they feel they have to go this alone?

Eric Pianin: I think they’re reaching that point now, given all of the very negative rhetoric that’s been coming out of these town hall meetings. I think some Democrats are a little concerned about Sen. Chuck Grassley of Iowa, who is a key player on the Senate Finance Committee, who has been negotiating with the Democrats trying to come up with a bipartisan bill. And yet, for the last couple of weeks, we’ve been hearing very negative, critical things from Sen. Grassley, which sort of signal that maybe he’s having second thoughts about the viability, the wisdom of cutting a deal with the Democrats. I think a lot of the Republicans are under pressure from their own leaders, from voters back home, who are very critical of President Obama’s approach to health care reform. They think it’s too big, too costly, too much of a government intrusion on their lives, and there seems to be a lot of pushback.

JJ: But even if the Democrats did decide they had to “go it alone,” within the party there are definitely different wings, different schools of thought about what should be enacted. So, there would even be problems under that scenario, right?

EP: I think that’s true. I don’t think there’s an easy road for the president and his allies to travel from here on out. As you say, there are quite a few moderate to conservative Democrats, both in the House and the Senate, who have strong reservations about this whole package, and the Democratic leadership would have to hold the party together on some key procedural votes to even get the legislation to the point where they can have a final vote. So even if they decide to go their own way and try to put together a strong coalition of Democrats and Independents, there still will be some white knuckle moments for them in trying to get legislation though this fall.

JJ: Eric mentioned a moment ago, Sen. Grassley, who is part of the small coalition on the Senate Finance Committee made up of three Democrats and three Republicans. What is the status? They were supposed to have fairly regular meetings through the August recess.

MAC: Sen. Baucus, who is head of the Finance Committee and is holding this coalition of six members together, has said that they continue to talk, they are going to have a teleconference tomorrow, and that they hope to meet again before Congress returns in September. So they’re certainly saying that they’re continuing to talk, but as Eric’s talking about, Sen. Grassley has made some comments. Sen. Enzi, who is part of the gang of six, has talked about he does not want a public option, perhaps the co-op is something to be considered. But then Jon Kyl, who is one of the Republican leaders in the Senate, was saying recently that the idea of a co-op is simply a Trojan horse, it’s a public option by another name. So how to resolve that issue is extremely unclear.

JJ: So at this moment in time, and we all know in Washington that this moment in time can be very different a month from now, are there any lines in the sand that the administration would still hold Congress to?

MAC: I think flexibility is key and it’s going to have to guide the process all along. They’re trying to show flexibility on the public option, even though there was some concern about remarks made a few days ago by administration officials that some suggested, thought that they were taking the public option off the table, and now they’re saying that’s not the case. So I think as this goes along, they’re continuing to send the signs that they want to work with Republicans, they want to work with Democrats, they want a package that, at least in the Senate, to get some bipartisan support. So I think the administration will work extremely hard not to draw any lines in the sand to try to remain as flexible as possible to get a package.

JJ: Do you want to jump in on that?

EP: Well I think that’s basically it. This is a very pragmatic administration. I think the president, Rahm Emanuel, the White House Chief of Staff, they’ve all said that everything’s negotiable, except the question of whether there will be a bill passed this year. So I think they’re willing to cut just about any deal necessary to have something to show at the end of this year. The worst thing for the Democrats is to come up empty, and so they’ve got to come up with some kind of bill. It may not the big, comprehensive, costly bill that they started off with, but they want to have something in the end.

JJ: And if it is something smaller, one of the people you interviewed for the web story that we’re publishing, said that if it’s a vastly scaled back version, it will serve as what was called a placeholder. What does that mean for something larger next year?

EP: I think what it means is that if you look at the history of legislating major social legislation – health care, civil rights, whatever – it’s a time consuming, difficult road to travel, and sometimes you have to start small. You have to get something passed to establish a beachhead, if you will, in the legislative process, and then you come back the following year and the year after. If you look at the whole history of the civil rights movement, for example, the early legislation was very weak and kind of milquetoast by today’s standards. But at least it was a beginning, and then the Johnson administration and predecessors were able to build on it. I think some of the experts looking at the situation now say the president may have been too ambitious in his plans. The Democrats and the president are going to have to scale back somewhat, get something passed, and then let’s come back next year or the year after to talk about it.

JJ: So it would be incremental as opposed to the big and bold that Obama campaigned on?

MAC: Right, I think a signing ceremony at the White House is the success they are trying to achieve. You can start small and build upon it later. I think that’s Eric’s point and I think that’s exactly right.

JJ: Thanks so much both of you, I appreciate it. And thank you for joining us, I’m Jackie Judd.